Islamic versus Conventional Banks Performance during the Financial Crisis: Application to the UAE

Abstract

This research examines the financial crisis’s impact on banks’ performances in the UAE. Comparisons of the performance of Islamic and conventional banks pre/post the financial crisis are used to establish whether Islamic banks can better absorb a financial shock. This is achieved by analytical and comparative analysis using a set of profitability, liquidity, leverage, market share, and growth rate ratios for the period 2005 - 2011 for both Islamic and conventional banks in the UAE. Ten banks; four Islamic and six conventional were the data set for this research. Six hypotheses were formed to test the effect of crises on the banks. These hypotheses are tested through the banks financial ratios.

The research finding provides insight into the impact of the financial crisis on the performance of both Islamic and conventional banks in the UAE.